Buyer’s Rebate in Hawaii: Your Key to Unlocking Affordability in the Big Island

Written By Sarah Ford

Thinking about calling the lush paradise of Hawaii your new home? Buying a home in Hawaii is exciting, but as you may be aware, it comes with a high price tag. The cost of living, fierce competition, and rising property prices can make purchasing a home in Hawaii a little intimidating. But here’s a tip – you can utilize a buyer’s rebate to lower the cost.

A buyer’s rebate can serve as a financial buffer. So, whether you’re dreaming of a beachfront home or considering investing in a vacation home with a lucrative rental opportunity, a buyer’s rebate can be your key to unlocking affordability.

Buying a home is an expensive ordeal. Even though home prices in Hawaii have gone down by 8%, a typical single-family home can still cost you approximately $832,900 (83% more than the national average! That means not only do you have to pay more against the home prices, but you will also pay extra for the realtor fee and closing costs too! A buyer rebate helps you shoulder these costs. Here is how…

1. What’s a buyer rebate?

A buyer’s rebate is an arrangement where a portion of the real estate commission or realtor fee that a buyer’s agent receives is shared back with the buyer.

Agents have developed this innovative marketing strategy to attract more buyers to use their services. Buyers can receive up to half their agent’s commission as a rebate and save thousands of dollars on home purchases.

 2. Where does a buyer rebate come from? 

As stated above, the buyer rebate comes from the buyer’s agent’s commission share.

In any real estate transaction, there are typically two estate agents involved — the listing agent and the buyer’s agent. The listing or selling agent represents the seller, while the buyer’s agent represents the home buyer. When the deal concludes, and the seller pays the commission, each agent earns a certain percentage of the home price as a commission.

If the buyer’s agent has agreed to give a rebate to their client (the buyer), a portion of their commission would be returned to the buyer. The specific amount depends on the agreement between the buyer and their agent and can vary widely.

For example, for an $800,000 home, agents can earn up to $50,000. Now if both agents have agreed to split the commission equally, the seller’s agent and the buyer’s agent each receive $25,000 in commission. Your rebate will come from this $25,000, which would be as listed in the agreement.

3. How much is the average buyer rebate in Hawaii 

There is no fixed percentage or amount for buyer rebates; it is completely negotiable. And different agents offer different commission rates or amounts depending upon the home’s location, real estate market, and the type of brokerage.

Considering that the median home price in Hawaii is $832,900, a rebate of 0.5% to 2% on the home price would work out to $4,164z to $16,658, which is no small amount.

Here is how it works: 

The average commission in Hawaii is 4.99%; for ease, let’s take this percentage to be 5%.

Assuming that buyer and seller agents share the commission equally, each gets 2.50%, then: 

 Total Commission Amount = Commission Percentage X Median Home Price

= 5%*$832,900 = $41,645 

Each agent will get half the total commission amount.  

So, each agent will get $41,645 ➗ 2 = $20,822

If the buyer rebate is 1% of the home price, then this works out to: 

Buyer Rebate Percentage X Median Home Price

= 1% X $832,900 = $8,329 

So, the buyer agent will receive $20,822 as his commission at closing, out of which he will give $8,329 to the buyer as a rebate and keep the remaining $12,493. 

Buyer rebate is generally expressed as a percentage of the home price or as a percentage of the buyer agent’s commission. 

3.1 Buyer rebate as a percentage of home price

Most buyer agents offer rebates as a percentage of the home price – for example if the home value is $500,000, a 1% rebate will be $5,000. 

The table below shows buyer rebates for a range of home prices in Hawaii. For example, we can see how much the buyer rebate amounts to when offered as 0.5%, 1%, 1.5%, and 2% of the home price.

Home Price rangeBuyer Rebate as % of home price
$700,000 – $775,000$3,500 – $3,875$7,000 – $7,750$10,500 – 11,625$14,000 – $15,500
$800,000 – $875,000$4,000 – $4,375$8,000 – $8,750$12,000 – 13,125$16,000 – $17,500
$900,000 – $1,000,000$4,500 – $5,000$9,000 – $10,000$13,500 – $15,000$18,000 – $20,000

3.2 Buyer rebate as a percentage of buyer agent’s commission 

Here’s another scenario where we look at buyer rebates in 20 of the best counties in  Hawaii. This time let’s look at buyer rebates when calculated as a percentage of the buyer agent’s commission. 


4. When do you get a rebate, and how can you use it?

When and how you receive a buyer’s rebate, as well as how it can be used, depends largely on the terms of your agreement with your buyer’s agent and local real estate regulations.

Typically, you get a buyer rebate at closing. A majority of the agents offer buyer rebates as closing credits. The closing credit offsets some closing costs, a common way to reduce the overall expenses while buying a home. This means a buyer must bring less cash to the table when closing.

Typically, the closing cost ranges between 7%-9% of the home purchase price and includes appraisal fees, buying mortgage points, escrow fees, loan origination fees, and transfer fees.

Rebates are negotiable and need to be mentioned clearly in the agreement

4.1 Can I get a buyer rebate in cash? 

Some agents offer buyer rebates as cashback, which has more benefits than closing credits. It can take many forms, like a gift certificate, closing cost payment, or inspection costs.

Cashback can be used any way you want, whether to cover moving costs, buy new furniture, or save up for emergencies.

5. Is a buyer rebate legal in Hawaii?

Buyer rebate is legal in 41 states in the US, including Hawaii. However, there are nine states, namely – Alabama, Missouri, Louisiana, Alaska, Kansas, Mississippi, Oklahoma, Oregon, and Tennessee, where rebates are illegal and viewed as a potential threat to the real estate industry. In addition, another state, Iowa, only allows rebates when there is only one agent in the transaction – when the same agent represents both buyer and seller (also called Dual Agency).  

Rebates must be listed as a credit on page 1 of the HUD-1 in lines 204-209, and the name of the agent or brokerage giving credit should be identified in the document. It must be disclosed to all parties, including the seller, lender, attorney, and whoever is involved in the real estate transaction. 

6. Is a buyer rebate taxable?

The IRS states that a buyer rebate is not taxable since it is considered an adjustment to the home’s total purchase price. Typically, when a real estate agent works as an independent contractor with a brokerage company, they fill out a 1099 tax form to report payments made to the broker. They then send a copy to the IRS and the buyer to report any additional income. If an agent returns a portion of their commission to the buyer as a rebate, it is reflected as reduced commissions on the closing statement.

It is not income but a form of discount. Therefore, agents should not send a 1099 form to the buyer at settlement. If an agent sends a copy, you can ask them to withdraw it. In case of any issues, it is better to talk to your tax advisor to clear up any doubts.

7. Should I disclose the buyer rebate?

Buyer rebate affects the real estate transaction’s overall cost, which lowers your home’s cost basis. Therefore, disclosing the rebate to your lender and all other parties in the transaction is always advisable. Failure to disclose the rebate to the lender can lead to severe issues, and your loan amount could be canceled. Or worse, you could be liable for mortgage fraud.

7.1 Why should you disclose the buyer rebate to the lender? 

It is essential to disclose buyer rebates to your lender as it affects the cost basis of your home. The lender uses the cost basis to calculate the loan-to-value ratio, which will decide the amount of loan you are eligible for.

7.1.1 What is the cost basis?

Cost basis is the home price plus the total expense you incur while buying a home, including the home purchase price, closing costs, inspection cost, moving cost, and any other financial investment you make to improve the home. A rebate will lower the home’s worth since it is credited to the buyer.

7.1.2 What is the LTV ratio

The loan-to-value ratio is the loan amount divided by the cost basis of your home. Your lender calculates the LTV ratio to decide the loan amount you will be eligible for. Usually, the lender tries to keep the ratio at 0.8 or lower. 

For example, for a home worth $250,000 and a commission rebate of $5,000, the LTV ratio turns out to be too high at 0.81.  

Here’s the calculation showing the LTV ratio in two instances – one when there is no rebate and another where the rebate is $5,000.

When the rebate is 0,

LTV = Mortgage Amount➗Cost Basis of the home

     = 200,000➗250,000

      = 0.8(Just right)

When the rebate is $5,000,

The cost basis reduces to = Home price – Rebate = $250,000 – $5,000 = $245,000

LTV ratio = Mortgage Amount➗Cost Basis of home = 200,000➗245,000

     = 0.816 (too high)

Since a rebate can change the LTV ratio, it is essential to disclose the rebate as soon as you receive it from your agent. 

8. Are buyer rebates negotiable?

Buyer rebates are always negotiable. Therefore, you must negotiate well before signing an agreement with any agent you hire for your home purchase. Negotiating after signing the agreement can be difficult, but in some cases, it is possible. Though it can be risky, you can negotiate a rebate even while closing if it can make or break a  deal.

Not all agents offer the same rebate, which may vary depending on their location, the situation in the real estate market, and which brokerage they are associated with. Some agents even offer up to 2% of the home price as a rebate, depending on how hard you negotiate with your agent.

9. How to negotiate a buyer rebate in Hawaii

Some agents are willing to negotiate buyer rebates, while others are not. The best way is to shop around and check what agents offer.

9.1 Direct negotiation

If you have found an agent you want to work with, you can directly ask how much rebate he can offer and tell him what you expect. If you are not convinced, you can shop around and reach out to several random agents providing rebates. When agents show interest, you can tell them that you will work with an agent that offers the best rebate deal.

9.2 Use a service where agents compete

Use a service like UpNest, where agents compete for your business. They have top agents who are willing to offer you a competitive rebate. You don’t have to do any awkward negotiations since UpNest keeps your information confidential until you decide to work with any specific agent. You can read agents’ reviews, talk to them on the phone, and interview several. You can also meet multiple agents until you find the best one to meet your requirement. You can pick the best rebate deal when the agents compete for your business.

9.3 Get pre-approved by a reputable lender 

If you are pre-approved by a lender, there are more chances of agents offering you a rebate. This is because agents will know that you’re a serious buyer and want to quickly close the deal. He also understands that he has to put in less time and effort to close the deal and, in exchange, can offer you a rebate as an incentive to work with him.

9.4 Do your research and narrow down your search

You can research online and find a few homes that might be interesting to buy. There are chances of getting a higher rebate from your agent in this case because you’ve already done some of the agent’s job of finding a home and narrowing down the search.  

10. How can I find the best agents offering the highest buyer rebate?

Many agents advertise rebates online, and most will be visible with a Google search. Here, we’ve created a list of a few top companies/websites where you can find real estate agents offering buyer rebates in Hawaii.

10.1 Clever Real Estate

Clever Real Estate, a free service, matches you with full-service agents offering rebates. You get built-in savings, and you need not negotiate separately. In addition to the agent matching service, Clever Real Estate provides 0.5% of the home purchase price as a cashback rebate to its home buyers. 

Clever Real Estate acts as an agent-matching service and a negotiator. It helps you find the best agent quickly and save thousands of dollars through the rebate you receive from Clever agents. In addition, there are no initial fees or obligations to use their service once you’ve signed up with them. Clever Real Estate’s average customer rating is 4.9 out of 5, based on 1,630 reviews on Trustpilot.

10.2 Redfin

Redfin is a discount real estate brokerage firm that advertises rebates for home buyers. This means they offer the same essential services as traditional brokerages but at a lesser price. However, though potential rebate savings are genuine, they may come at the expense of service quality if reviews are to be believed. 

According to Redfin, the average buyer qualifies for a rebate of around $1,750. However, there is no clarity on how Redfin calculates this rebate amount. Therefore, you need to check with your agent or lender to determine whether you qualify for the rebate and how much the rebate will be in your case.

Redfin commission rebates are subject to numerous terms and conditions, such as being limited to selected markets, and their refund can be used only to pay certain costs. Also, they only offer rebates when an agent earns at least $6,500 in buyer agent commission. Regarding customer reviews, Redfin has an average customer rating of 3.9 out of 5 based on 416 reviews on Zillow, Yelp and Google.

10.3 UpNest

If you plan to buy a home, UpNest can connect you with the top real estate agents. Like all matching services, UpNest is free to use, and there are no obligations for signing up. However, once you sign up with them, you will find agents competing for your business via rebates. The competition among agents helps you get the best rebate deals with the minimum amount of negotiation.

In addition to its agent-matching service, UpNest offers 0.3%-0.75% of the home price as a rebate. As a selling point, it provides a $150 Amazon gift card. UpNest savings are guaranteed no matter which UpNest agent you decide to hire. They claim to have top-quality agents and easy-to-use dashboards. However, it might be challenging to reach its representatives sometimes if a few reviews are to be believed. 

UpNest has a weighted average rating of 4.6 out of 5 based on 3,794 customer reviews on Google, Facebook, Shopper Approved, and Better Business Bureau. Overall, customers were pleased with the UpNest agents and their service quality. 

10.4 HomeLight

HomeLight is a licensed real estate brokerage whose core offering is its agent matching service. It pairs you with real estate agents in your local area to help you with the home-buying process. Like all agent matching services, HomeLight is free, and there is no obligation to use their online service after signing up.

HomeLight claims that it has served 1 million+ customer with its networks of 28,000 real estate agents, and it supports $1 billion in real estate transactions annually. [Note: It previously listed the size of its agent network as 70,000 on its website and, in the spring of 2021, changed that to 28,000, which may impact the service quality offered to customers]. 

HomeLight’s agent matching service is fully automated; customers can reach out to them at their convenience and not just during business hours. It offers more options to customers, especially in smaller towns and rural areas. However, it does not offer any rebates. Customers generally like its service, and it has an average rating of 4.46 out of 5 on Site Jabber, based on 211 reviews.

10.5 is an agent-matching service that helps buyers find agents. They claim to have top agents with local experience, extensive market knowledge, and the skills required to guide you through real estate transactions. 

Their data-driven approach helps them list millions of homes and select top agents to work on their platform. They have thousands of quality agents and many data points to match you with the agent who offers the highest rebate. You can negotiate a rebate when you connect with their agents. has a customer rating of 4.5 out of 5 based on 106 reviews on Shopper Approved, which collects reviews only from verified customers. If you look at its Trustpilot rating, it has a 3.4 out of 5 based on 28 reviews. 50% of the reviews on Trustpilot rate it as excellent, and 39% as bad. A point of concern is that a few customers stated that cancelling the service was a problem.

10.6 is the National Association of Realtors’ official home search platform. You can find all the publicly listed homes for sale with a few clicks. In addition, the platform gives you an idea about the general asking prices, what type of homes you can expect within your budget, and other neighborhood information. 

The real problem starts when you want to connect with an agent. You need to fill out multiple forms to get in touch with someone, and your information will be shared with all the real estate agents. You might be slammed with phone calls, text messages, and emails with offers, including sales pitches. has a 2.7 rating out of 5 based on 1005 reviews on Trustpilot, of which 46% reviewed it as excellent, and 15% rated it as harmful.

10.7 Hawaii Real Estate Team

If you are looking for a buyer agent who can offer you a rebate to save you thousands of dollars, Hawaii Real Estate Team can be an option. They offer 50% of their agent’s commission to buyers as a rebate, provided the brokerage earns a minimum of $3,500 on the transaction. 

Hawaii Real Estate has trained full-service agents, modern technology, and efficient systems & procedures to help you with home-buying. Your rebate will be 1.25%-1.5% of the purchase price, which you can use to pay for escrow fees, inspections, or mortgage points. 

Hawaii Real Estate claims to make your home search much easier and more efficient. If you have found the property, they’ll help you look at comparable properties to determine the best price. They will also negotiate the best price with the seller to get you the best deal. Customers generally like Hawaii Real Estate, and it has a 4.7 rating out of 5 based on 21 reviews on Zillow. 

10.8 OahuRe – Bryn Kaufmann

Oahu Real Estate’s website is loaded with a lot of real estate information, typically hidden by agents. For example, unlike other websites, OahuRe shows all pending, withdrawn, and expired listings so that the user can get a complete set of comparables. Also, when viewing any listing, you get to see a 15-year history of that listing’s neighborhood, street, or building. 

The OahuRe team of agents claims to have sold over $991 million in residential real estate. OahuRe agents offer a 20% rebate on their commission to home buyers if you purchase a home through them. When we look at the customer reviews, it has a 5-star rating based on eight reviews on Yelp.

Here’s a list of websites/agents offering rebates as mentioned above:

Website/Firm nameRebate OfferedUSP
Clever Real Estate0.5% of home price$150 + 0.3 to 0.75% of the home price
Redfin0.22% of home priceUser-friendly website
UpNest50% of the agent’s commission User-friendly website
HomeLightNAUser-friendly website
Realestateagents.comYou can negotiate a rebate when you connect with their agents.Local agents familiar with the market
Realtor.comYou can negotiate a rebate when you connect with their agents.Fast online service. Good for getting an idea of the market situation
Hawaii Real Estate Team50% of the agent’s commission Local agents familiar with the market
Oahu Real Estate20% of the agent’s commission Local agents familiar with the market

11. Why do agents offer buyer rebates?

There is a misconception that agents lose money while offering a buyer rebate. Offering rebates is a pure marketing strategy. Agents offer rebates to prospective buyers to encourage them to use their service. Buyer rebate allows agents to stand out in the market. This increases their overall commissions from the volume of real estate transactions.

Here are some reasons why agents offer rebates.

11.1 To cut off competition

Hawaii is a realtor-flooded market where many agents compete with each other for clients. Considering the high home prices in Hawaii, getting buyer clients in real estate isn’t easy. Rebates can encourage buyers to work with an agent and help them stand out in a challenging market. 

11.2 As a reward for less work

With the increase in internet users, many people search for homes online. There are websites like Zillow and which provide all the listing information. Buyers can easily find homes and shortlist the ones they are interested in buying. This helps agents spend less time showing homes to buyers. They also have more time to sign on more clients and increase their earnings through a higher volume of transactions.

11.3 When a home is difficult to sell

Some buyer agents face challenges finding buyer clients who are wealthy enough to buy an expensive home. Rebates reduce some of the buyer’s expenses, enabling them to purchase a previously unaffordable home.

11.4 To retain customers 

Rebates help maintain customer loyalty because it directly benefits the buyer. The buyer is reassured that the agent is considering the client’s best interests. This is a strong reason customers stay with the agent, even when there are minor issues or misunderstandings.

11.5 As a trade-off to pricier services

Not all buyers are interested in dining or being driven in a Mercedes by their real estate agent for home showings. Instead, buyers want to do their home search themselves and save money on such pricier services with a rebate.

11.6 Agents are more likely to close a sale with a rebate

Some buyers may back out from the deal due to their limited finances. However, a rebate might just help bring the home into their budget by covering some of the closing costs. So they’ll be more willing to close the deal with an agent offering such a rebate. 

11.8 A rebate will attract serious buyers  

A real estate agent only refunds the home buyer at closing. This means offering a rebate will only attract serious buyers looking to close a home purchase. Thus, rebates will enable agents to attract the right kind of customers rather than wasting time elsewhere.

12. Will receive a rebate means the agent will reduce services?

Some companies trade off services while offering a rebate. However, you don’t have to compromise if you need full assistance. Some agents and brokerages offer full service and rebates as well. You can find agents who don’t cut down on their services. Before that, you need to know what a full-service agent actually does. 

Here’s a list of services you can insist on with your agent even if offered a rebate. A good agent usually:

  • It helps you to determine your goals and objectives for buying a home.
  • Provides you with enough information regarding communities, schools, churches, and other neighborhood information near the home.
  • Shows you homes that meet your needs.
  • Reviews your estimated funds required for the home purchase, including monthly mortgage payment, insurance, escrow, etc.,
  • Assists you with financing options through the pre-approval process and determining the mortgage you may qualify for.
  • Helps to promote your home search (when required) to the listing agents or homeowners who have not been listed in the market yet.
  • Allows you to view properties before other buyers who’ve not hired any agents.
  • Presents you with a comparative market analysis before you make an offer on a specific property.
  • Plans a negotiation strategy and makes you negotiation ready in the home buying market.
  • Schedules and attends the property inspection with you and helps you with the re-negotiation after the inspection results.
  • Monitors the appraisal, title insurance, and loan approval process once the contract is accepted.
  • Attends the closing with you.

13 How to increase your chances of getting a real estate rebate

Many agents are willing to offer a rebate. You need to search for agents who are ready for negotiation. To maximize your chances of successfully negotiating a real estate rebate:

13.1 Take some of the responsibility of your agent

With most of the listing information available online, you can do your home search on your own before reaching out to an agent. You can inform the agent that you’ve already done the home search, and he doesn’t need to accompany you for any showings. You can ask him for a rebate in return. Agents are more willing to offer you a rebate when you have already done the home search.

13.2 Use the same agent to buy and sell your property

In addition to purchasing a home, if you have a home to sell, you can try to use the same agent for both buying and selling your home. In such instances, an agent will receive both commissions and be more willing to share his profit as a rebate to you.

13.3 Buy a property the agent is already selling

If you want to sign up with one agent, you can ask the agent if he or she is also working on selling homes. If you like one of these, you can ask the agent to give you a rebate since the agent will receive a commission on buying and selling that home. 

14. FAQs 

14.1 Are home buyer rebates and first-time buyer credit the same? 

No, home buyer rebates and first-time homebuyer credit aren’t the same. The home buyer rebate is where a buyer agent shares a portion of their commission with the buyer at closing. Whereas the First-Time Home Buyer Act introduced in 2021 modifies the first-time homebuyer tax credit from $8,000 to $15,000. This tax credit is supposed to be paid by the US government once the bill is passed. However, as of March 15, 2022, the bill has not yet passed. Once the bill is approved, it will focus on low- and middle-income people to enable them to purchase more homes.  

14.2 Do realtors really work for free for home buyers?

Real estate agents don’t work for free for home buyers. Though the seller pays the commission to agents after the home sale, this cost is baked into the home’s purchase price, which the buyer pays. So, technically, the home buyer pays the buyer agent’s commission. However, if the buyer doesn’t hire an agent, the entire commission goes to the seller agent, and the buyer may not get a rebate.

14.3 How to ensure you are eligible to get a rebate. 

If you plan to buy a home in a state where rebates are legal, you should check out how to make yourself eligible to get a buyer rebate. Many agents have different criteria to qualify their buyers for a rebate. Since rebates are negotiable, you need to shop around to find the best deal. Do some homework before reaching out to any agent.

Here are a few steps to follow to ensure you are eligible for a rebate:

14.3.1 Do your research on local agents before hiring someone, as you may not be able to re-negotiate a rebate once you’ve signed the agreement with the agent.

14.3.2 Once you’ve identified potential agents, review their terms and conditions on how much rebate they offer. For example, some agents provide a fixed amount as a rebate, while others offer a percentage of the home price. Take your time to calculate which agent gives you the best rebate.

14.3.3 Only if you are convinced of all the terms and conditions should you sign the agreement with your agent. For example, some agents put a situation where they need to earn a minimum commission before they give you a rebate. Make sure this works for you before signing.

14.4 Will availing of a rebate affect the price of the home?

No, a rebate does not affect the home purchase price but affects the cost basis of your home (the overall expense you incur while buying the house). Rebate helps to offset some of your closing costs, such as escrow fees and inspection costs, moving costs, etc. Additionally, rebate affects the capital gain taxes through your cost basis (when you plan to sell the home). A lower cost basis makes it seem like your property gained more value over the years than it did. This, in turn, will increase your taxes in the future. 


Buyer Rebates are a great way to save thousands of dollars. Though rebates can be either cashback or closing credit, you should opt for a cashback rebate as it has more benefits than closing credit. Closing credit can only be used for specific closing costs.

Research what agents offer, and ensure you qualify for a rebate before signing up. Don’t forget to disclose a rebate to your lender once you’ve decided to close a home purchase. 

It is also important to note that a rebate should not be the only criterion for deciding on an agent. The services they provide are equally important. There should be no trade-off of benefits for the rebate. After reviewing thoroughly, if an agent meets all your requirements, only sign an agreement with them.

Written By:

  • An experienced marketing consultant with a decade of hands-on experience in real estate. You might catch her at a local jazz bar on a Friday night or at home experimenting with vertical kitchen gardens.

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